Friday, February 10, 4:45 PM EST (Thomson Financial): Latin American
stocks were mixed, with Brazilian stocks managing slight gains on promising
inflation data and news the government plans to buy back foreign debt.
Meanwhile, Mexican shares fell, as investors digested earnings news from
Walmex and lackluster U.S. trade data.
Brazil's Bovespa Index gained 92.96 points, or 0.25%. Mexico's benchmark
Bolsa Index dropped 219.75 points, or 1.19%, while Argentina's Merval Index
fell 9.35 points, or 0.55%.
Brazilian stocks edged up, as investors were cheered by news that Brazil's
government plans to buy back short term foreign debt in a bid to improve
Brazil's debt profile. The Treasury announced that it will buy back foreign
debt coming due before 2010. The move will reduce public debt as a percentage
of GDP and lower gross debt as a percentage of exports -- two figures that
ratings agencies use to gauge a country's solvency. The Treasury will also buy
back Brazil's outstanding Brady bonds.
Lending additional support to shares, some fresh data helped to ease
inflation concerns generated by a report earlier in the week showing an
acceleration of consumer inflation. Research institute Fipe said the Sao Paulo
consumer price index rose 0.2% in the four weeks ended February 7, compared
with an increase of 0.5% in January.
Also, the Getulio Vargas Foundation said that its General Price Index, or
IGP-M, slowed in the first 10 days of February, rising just 0.03% following a
0.40% increase in the first 10 days of January. The data helped to reassure
anxious investors that the central bank will continue its interest-rate
cutting campaign that began in September.
On the corporate front, telephone carrier Embratel Participacoes reported
a fourth-quarter loss of 17 million reais, narrower than a year-earlier loss
of 213 million reais, as the cost of connecting to other company's networks
rose. Net revenues rose 4% to 1.94 billion from 1.86 billion the year before.
Meanwhile, oil giant Petrobras said that its new P-50 offshore oil rig
will start production in the Campos basin in early April.
Petrochemical firm Braskem's CEO Jose Grubisich hinted that his company
might be interested in participating in a US$3 billion petrochemical project
in Venezuela, after ExxonMobil was removed from the project. "The news on
Exxon has made us stop and think about other possibilities (in Venezuela), but
I can't confirm anything in this area (so far)," he said.
Elsewhere, Mexican shares resumed their downward march, following
yesterday's positive reprieve. Walmex's financial report was in focus today,
and investors are awaiting Telmex's results after the close on Monday.
Investors also digested economic news in the U.S., where the trade deficit
surged to an all time high of US$725.8 billion in 2005. The surge came from
imports of oil, food, cars and other consumer goods.
In earnings headlines, Walmex shares tumbled, despite its upbeat financial
release last night. The retail titan's net profit for 2005 arrived at 9.47
billion pesos on sales of 164.3 billion pesos. Same-store sales advanced 5.8%
from 2004. Ebitda surged 24% to 15.37 billion pesos, while operating profit
jumped 22% to 12.26 billion pesos. For the fourth quarter, net profit edged
down 2% to 3.54 billion pesos. Ebitda jumped 22% to 5.30 billion pesos, while
operating profit rose 25% to 4.57 billion pesos.
In Argentina, stocks slipped today in what has been a broadly lackluster
week of trading. After a major rally in January, investors are somewhat
hesitant to buy shares before earnings season begins in earnest in Argentina.
Telecom Argentina advanced, after the firm said it plans to ask
bondholders permission to alter the terms of last year's debt restructuring.
The firm wants to eliminate restrictions on its wireless operator's investment
in capital goods.
-- Paul.Davee@thomson.com; Thomson Financial Corporate Services
This is Thomson Financial Corporate Services Latin American Commentary.
The information herein is believed to be true and accurate, we take no
responsibility for inaccurate information and reserve the right to update our
reports. If you have any questions please e-mail James Sang at
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SOURCE Thomson Financial
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